The February numbers aren’t appealing: employment growth is crashing (‘000):
Job creation has been negative in four out of the last five months – a cumulative reduction of about 400k jobs. That’s a serious divergence between the labour force numbers, and the growth of the economy as a whole.
Unemployment however, has remained fairly steady (‘000):
There’s been a net increase of just 2k over the same period, and an unemployment rate that is barely creeping up (% labour force):
The reason for these divergent trends is a declining labour force participation rate (ratio to labour force):
The chart above includes an indicative trend (including monthly dummies and a structural break in January 2013), which suggests the drop in the LFPR over the last couple of months was “normal”, although the movement over the past year was not.
That, I suspect, was mainly a result of the imposition of the minimum wage in January 2013, and its enforcement in January 2014. As an aside, wage growth has been blistering over the same period – over 8.0% in the manufacturing sector since June, and for all sectors over the past two years.
I really can’t say whether the excessive number of people leaving the labour force is something that will keep continuing, but if I had to bet, I’d say it has. There’s also a lot of “noise” in the employment statistics, so that’s something to bear in mind as well.
Nevertheless, this is something to keep an eye on for the immediate future.
February 2014 Employment Report from the Department of Statistics (warning: pdf link)